Argentina loses case for YPF and must pay US$ 16,000 million

The federal judge of the Southern District of New York, Loretta Preska, ruled this Friday in favor of the Burford Capital fund in its litigation with the Argentine state for the expropriation of YPF, and forces Argentina to pay the largest possible amount, US$ 16,000 million.

The judge specifies in her ruling made public today that “the Republic (Argentina) exercised indirect control over the required number of Repsol shares on April 16, 2012, and consequently triggering that tender,” and adds that “retroactive annual interest of 8% is appropriate and must accrue from May 3, 2012″.

“Finally, the Court declares that Professor Fischel’s calculation of the tender offer is correct and is based on the price/value ratio required in formula D“, states the judge’s 25-page ruling, a ruling that the newspaper Clarín has considered “catastrophic” for Argentina.

While the accusation claimed US$16,000 million, Argentina estimated that – based on a previous ruling by the judge – it would have to pay close to US$5,000 million, although the Government of the South American country already announced that it would appeal any decision in this regard.

The case dates back eight years and settled the compensation that Argentina should or should not pay to YPF investors, who argue that they were affected when the State expropriated 51% of the oil company’s shares from the Spanish company Repsol and It did not make a public offer for the rest of the securities.

Argentina loses both arguments: date and interest rate

The judge’s ruling focuses on two main issues: first, it establishes that “The date of dispossession (that is, of the expropriation of Repsol) was April 16, 2012″ -the date on which the expropriation decree was issued-, something that “even the markets recognized”, since that same April 16, YPF shares fell by more than 40%, recalls the judge.

The Argentine State had argued that the date of expropriation should be May 7, when the law that gave legal coverage to the events came into force.

“Significantly, even Argentine officials acknowledged that April 16 was, for all practical purposes, the date on which Repsol could no longer dispose of its shares to control the company.”, and then quotes the words of the then Secretary of Economic Policy Axel Kicillof.

The second issue, the most damaging for the Argentine state, is that of the retroactive interest rate, which Buenos Aires claimed was 0%, but the judge has opted for the highest valuation.

“The Court determines that the 8% interest rate is appropriate and equitable (…), it is the rate that the Republic (Argentina) grants in similar circumstances. The Republic paid Repsol for its expropriated shares of YPF 5,000 million in treasury bonds, including the debt that carried a compound interest of 8%“, specifies the judge.

“It is a rate that falls perfectly within the ranges imposed by the Argentine courts.”, insists the ruling.

Argentina’s defense had asked the judge not to impose the payment of interest and, if she decided to do so, to establish it at most in a range of between 3% and 4%, but finally the judge rejected their arguments.

Will appeal ruling

“The Argentine Government will immediately appeal the ruling of Judge Loretta Preska”, the presidential spokesperson, Gabriela Cerruti, published on her social networks.

The president of Argentina, Alberto Fernández, who is in India to participate in the G20 Summit, “analyzed the issue with the Treasury Attorney General’s Office“added the spokesperson.

“We will continue to defend energy sovereignty and our state company YPF against vulture funds”, he warned.

Source: EFE